Malta – the Regional IT and Financial Services Centre

ow in the , the small but highly ambitious island of has after some four or five years of low or negative growth, are reflected in the Nbecome one of the most attractive investment locations in the region, amount of inward investment the country attracted in the same period: and is well on its way to achieving its vision of becoming the regional close to €1.3 billion in 2006. This is more than double the €510 million for centre of excellence in IT and financial services. the whole of 2005, and well over three times the €333 million for 2004. Optimism that this trend will continue is high, particularly since Malta has Just four years into European Union membership, having adopted the joined the eurozone, a move that is widely expected to be significantly its currency on January 1 2008, the tiny island is advantageous for the island’s future prospects. beginning to enjoy the results of years of sustained efforts to transform its economy into a sharply-tuned instrument of growth, custom-designed The island’s current success was not achieved overnight: in the four to address the challenges of the globalised world. Positioned strategically decades since independence, the foundations for a sustainable economy between Europe and North Africa, the island promotes itself as a stepping based on tourism, industry and services were laid. Initially, from the mid- stone between the two continents, and is building a strong reputation as sixties to the mid-eighties, Malta sold itself as a manufacturing base for the ideal regional hub for expansion-focussed businesses. products like textiles and electronics, using low wages and plentiful supply of labour as its main selling point. However by the end of the eighties it The island’s legislative and regulatory systems, formulated and was recognised that educating the work force to include highly qualified implemented over the last fifteen years to create a solid yet flexible professionals would attract higher value added products and services to framework for business, its state-of-the-art telecoms infrastructure and the island. wealth of highly skilled professionals in every field, plus the injection of EU structural funds accelerating the upgrading of the general infrastructure, Reaching the euro goal combined with its central Mediterranean location and unique sun-kissed Achieving this change required decisive action: privatisation of many lifestyle are coming together to help Malta win both investment and government enterprises, radical restructuring of state-owned companies, international recognition. tight control on government expenditure, higher effective taxation and a stringent tax compliance regime were some of the measures aimed at History reducing the country’s deficit and establishing a stable fiscal platform With a history that spans seven millennia, the island, already blessed with for the island’s economy. Concurrently, EU membership since 2004 and the exquisite natural beauty of its golden limestone, crystal clear sea and efforts towards euro adoption in January 2008 added further challenges charming rural landscape, is a treasure trove of historical heritage. From as Malta’s government introduced often unpopular measures to meet the the extraordinary 7,000 year old Neolithic temples, the oldest known Maastricht criteria for euro adoption: to reduce the deficit to below 3%, human structures in the world, decorated with their sophisticated statuary cut back levels of public debt to below 60% of GDP and rein in inflation and carvings, Phoenician shrines and burial places, ancient Roman villas, and unemployment. bath houses and olive oil presses, medieval chapels, baroque palaces and Renaissance cathedrals, the island provides a living snapshot of an Now, as Malta celebrates its adoption of the euro, it is already clear that enduring and fascinating history. achieving these goals was worth the sacrifices: Malta today boasts new industry sectors, knowledge-based activities that barely even existed two Malta’s history is intrinsically linked with its location right in the centre of decades ago, such as ICT and financial services, which are now jostling the Mediterranean Sea. Just over 100 square miles in area, the Maltese the shoulders of the upgraded traditional leading sectors of tourism and islands, comprising Malta, Gozo and Comino, lie midway between Europe manufacturing as they compete for the title of fastest growing sector. In and North Africa, 60 miles south of Sicily and 120 miles north of Libya. addition, the island is now one of the most respected jurisdictions in the Malta’s 390,000 inhabitants are among the most international of peoples: region and can offer investors and businesses the security and stability of its 7,000-year history brought a succession of foreign conquerors to rule operating not only within the EU, but also within the euro area. the island, from the Phoenicians, the Romans, the Arabs, the Normans, the Bourbons, the Knights of St John, the French, briefly, and finally the Opportunity sectors driving the economy British until 1964, when Malta won independence from Britain after 160 Malta’s accession to the EU in 2004 brought significant sector-specific years. Today, the islanders are among the most creative and determined of advantages. One of the main reasons Malta has become such an attractive peoples, blessed with the unique ability to adapt to new ideas and adopt, domicile to many financial services firms is the passporting rights firms and improve, the best of them to their ultimate advantage. enjoy to other EU and EEA areas, which has led to Malta becoming a magnet for insurance and fund management firms. Economy Malta’s GDP stands at around €5.5 billion and the island registered growth Other areas are also doing well. Remote gaming is fast becoming a rates of 3.3% in 2006, 3.8% in 2007. These encouraging statistics, coming major revenue earner and employer, again driven for the most part by

WCR 1 1 Figure 1. Siegfreid Generics, Malta Figure 2. Methode Electronics, Malta Ltd, Malta

effective regulation. The ICT sector is also on a roll, with Malta-based firms smaller, industries are also helping raise Malta’s international profile. With enjoying success on an international stage. Malta-developed software is productions such as Spielberg’s Munich, the Da Vinci Code, Troy, Gladiator, making substantial leaps forward, and the new SmartCity project, with an The Count of Monte Cristo and a host of others choosing Malta as their investment of Lm300 million1 by the developers of Dubai Internet City, principle filming locations, the international film community of directors, Tecom, can only accelerate that trend. producers and artists are learning that Malta’s facilities, including the ease of doubling up for multiple locations, the multi-lingual work-force and Tourism, despite disappointing results in 2006, has turned a corner, and the island’s natural beauty and wealth of historical sites, make it ideal for new investment in five star hotels and conference and incentive travel filming full-length productions, TV series and commercials. facilities continues to strengthen the island’s product offering. The recent decision to open up the market to low cost airlines has given the industry a The bottom line massive boost, and new niche segments such as weekend visits and short Malta offers foreign investors the security and ease of operating within breaks are successfully attracting a previously untapped, less seasonal- EU borders yet within easy reach of the emerging markets of North Africa centric, market. The continuing success of the conference and incentive and the Middle East, supported by top class legislative framework, a business (MICE) is being matched by the cruise liner business, with arrivals stable political and economic environment, and a cost-effective, driven rising steadily every year. workforce. For foreigners working in Malta, the combination of an efficient business climate and excellent infrastructure enhanced by the relaxed Financial services, ICT and tourism, as well as high end manufacturing, are holiday environment in which they operate offer a unique and magical the drivers of the economy at the moment, but a couple of other, much opportunity to do business in the sun successfully. ■

1. Maltese . The euro replaced the as the official currency of Malta on 1 January 2008

2 WCR